One of the key drivers of 2016’s volatility and nervousness has been the weakness of the Chinese economy. China’s manufacturing PMI data continued to disappoint yesterday, coming in below expectations. Global growth concerns have weighed heavily on the minds of central banks this year as the ECB and RBNZ face easing prospects while the BoJ committed to easing yesterday. The Federal Reserve continues to monitor global economic and financial developments, exercising caution on their policy decisions. With the RBA meeting today, analysts expect rates to remain on hold for now, while the RBA retains its easing bias.
European stock markets reacted to falling commodity prices and China data, with the FTSE and DAX down 0.4%. US markets remained stable closing slightly in the red despite ISM manufacturing data coming in below expectations.
Oil prices failed to retain last week’s gains as traders lose hope of output production cuts from Russia and OPEC states. BRT and WTI dragged the market lower again yesterday dropping to $34/bbl and $31.30/bbl respectively. With no production cuts in sight, Indonesia’s membership reactivated, and Iran planning to increase its production to 1.5 million barrels a day (an increase of 400k), further downside is expected until fundamentals change.
Trading quote of the day: An investment in knowledge pays the best interest. Benjamin Franklin
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